Why Are Financial Advisors Important For An Estate Plan?

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A financial advisor can play a crucial role in an estate plan. Financial advisors are focused on the client’s finances so they can help prevent mistakes in estate planning. Here’s why financial advisors are important for estate planning. 

Importance of Financial Advisors for Estate Planning

When you’re estate planning, you are likely working with an attorney who can help you plan, draft, and write legal documents. However, lawyers aren’t the only people you can work with to ensure your estate planning process goes smoothly. 

Financial advisors don’t create legal documents, but they can help protect your estate plan. Here’s how: 

Retirement Planning

Financial advisors can help small businesses and employees set up their retirement plans, including 401(k)s, IRAs, and other retirement accounts. They can also help you understand the tax benefits and breaks of each, along with beneficiary details. Advisors can also help you decide which type of account is best for their particular situation, goals, and budget. 

Updating Beneficiaries

Most estate plans involve investment accounts, assets, insurance policies, and more. For more information on what is involved in an estate plan, check out this end-of-life planning checklist. Each section of the estate plan has a beneficiary designation, such as a will, which will be kept up to date with the help of a financial advisor. These professionals can provide recommendations for adjusting beneficiary designations after significant life changes, including:

  • Divorce
  • Remarriage
  • Death of a family member

Your financial advisor can review your accounts and insurance policies periodically to make sure they are up to date with the right financial information and make recommendations as your life changes from time to time. These professionals can also point out discrepancies in your beneficiary designations and estate planning documents.

Providing a Second Glance

Many individuals see their estate planning as a one-time thing. However, estate planning documents don’t always reflect what you want to happen, especially as financial situations change. Many problems that arise from a disconnect can be resolved by having a second set of eyes on your estate planning documents:

  • Read and understand the document
  • Make understanding the document easier for you
  • Have discussions about what you want

Unfortunately, many lawyers charge by the hour, so most people don’t want to spend more time with them. Many people need someone, such as a financial advisor, who can be trusted to discuss private matters and have conversations that make understanding things like investments, assets, and estate planning easy. 

Financial advisors are bound by your agreement, much like a lawyer, to keep things private. While they cannot give you legal advice, they can help you go over the documents in great detail to discuss situations where the plan might be at risk. 

Pointing Out What Can Impact Your Plan

Financial advisors can also pinpoint significant life changes and discuss how they can affect your estate plan. Your advisor knows everything about your finances, which means they’ll need to know everything about your life so they can determine how certain situations affect your finances. 

Your advisor should be able to walk you through the major changes that can impact your estate plan and give you an idea of how things can change. They can help you decide when to take Social Security benefits and pensions and even tell you the best time to retire. 

Teaching You the Financial Impact of Changes to Estate Planning

When you change your estate plan with a lawyer, they may not know how edits will impact your financial life. Financial advisors, however, understand how almost any changes to your will, trust, auto insurance, and other end-of-life documents can impact your financials. 

Before you edit your will, make sure to call your financial advisor to determine how this will impact you and your beneficiaries. 

Explaining What Can Happen Without Changes

Many people create their will and leave it at that. Many people forget to update their wills every so often as their lives change. For example, if you have children, you should update your will immediately to name a guardian. Having a financial advisor to call means you can make sure updates are done right and on time. An advisor can remind you to update your will when there are any changes to your finances. They can also periodically check your estate plan to make sure everything is okay or to let you know when changes need to be made.

Can Help Your Family 

Financial advisors don’t only help you; they can help your family who will be grieving after you pass away. These professionals can help them prioritize what needs to get done immediately, figure out what can wait, and do the things family members shouldn’t have to do.

Financial advisors have a plan and steps that will be taken with your family when you pass away or become incapacitated because they became involved in your estate planning. 

Planning for Care

Your estate plan also prepares you for long-term care if you are incapacitated. You may use a trust to plan for your long-term care needs. Speaking to a financial advisor can help you find a solution that works best for your financial situation

Help You Find an Attorney

If you’ve never worked with an estate planning attorney before, it can be difficult to find one you trust. Your financial advisor has connections and can help you find a trustworthy and reliable estate attorney. Financial advisors work closely with attorneys of all kinds, so they can help you find one that makes your estate planning process easy. 

Final Thoughts

Estate planning might be the last thing you want to think about at the end of a busy day, but it’s important for your family’s sake if not your own. The only person who can plan your estate is you, so make sure you work with professionals you can trust. 

Before you start planning for your end of life, consider who you want to be involved in your estate planning process. Your financial advisor can’t give you legal advice, but they can give you financial advice that can greatly impact your will and trust. 

Matt Casadona

Matt Casadona has a Bachelor of Science in Business Administration, with a concentration in Marketing and a minor in Psychology. Matt is passionate about marketing and business strategy and enjoys San Diego life, traveling, and music.